Nvidia’s expected free cash flow over the next two years highlights the artificial intelligence chipmaker’s huge potential, a chief investment officer said. Free cash flow (FCF) is the cash a company generates from its operations after accounting for capital expenditures. It represents the money a company has available to distribute to shareholders, pay down debt, or reinvest in the business – all of which typically help lift the stock price. “The statistic that really shocked me is that Nvidia’s 2026 cash flow forecast is higher than Microsoft’s,” Yuri Khodjamirian, chief information officer at Tema ETFs, told CNBC’s Squawk Box Europe, highlighting Nvidia’s 2026 cash flow forecast. significant growth trajectory. FactSet data shows that Wall Street analysts expect Nvidia’s free cash flow to rise to US$78.7 billion and US$91.1 billion in fiscal 2025 and 2026 respectively, surpassing Microsoft, currently the world’s most valuable company. The forecast is driven by surging demand for Nvidia’s artificial intelligence chips, as software companies increasingly rely on these powerful processors to power their artificial intelligence models. Spending by software giants like Microsoft, Amazon and Google is pushing shares of Nvidia and other semiconductor companies to new heights. Last week, Nvidia’s market value exceeded US$3 trillion for the first time, briefly surpassing Apple and becoming the second largest listed company. NVDA 1Y Series Khodjamirian noted that Nvidia is “setting the pace” in the industry, with annual product releases that its competitors are hard-pressed to match. “I think the fundamentals are very bright,” said Khodjamirian, who manages the TEMA Monopoly and Oligopoly ETF. However, some investors, including Khodjamirian, say the revenue potential of AI software (which is a customer of Nvidia) remains uncertain, which could limit the future growth of AI stocks. Anthony Ginsberg, CEO of Gins Global, the company behind the Tech Megatrend ETF, dismissed these concerns, saying that artificial intelligence is accelerating the adoption of cloud services and that a large portion of U.S. IT spending is cloud-centric. “If you’re a CEO and you don’t have an AI mission, you’re going to get hit,” Ginsberg told CNBC Pro. Ginsberg predicts Fortune 500 companies will increasingly integrate their artificial intelligence and algorithm business are outsourced to cloud service providers, which will benefit companies such as Google Cloud and Microsoft Cloud. “If I were a bettor, I wouldn’t bet against Satya Nadella. So between Microsoft and Google, which is run by Sundar Pichai, I would say they’re going to continue to crack down on Amazon,” Ginsburg said, suggesting that Microsoft and Google are well-positioned to take market share from Amazon in the cloud.
